In my opinion, this is to supplement the core business only since it is helping them to create brand awareness. There is no point in listing it as a separate business because if we look at RCB’s track record, currently it has a huge fan base which is mainly due to the presence of Virat Kohli. And this will continue till his presence or if they onboard someone better than him. So the brand is highly person driven and that is why the sustainability of the value of the brand is uncertain.
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USL may be unintended beneficiary as management at main competitor will be forced to stop unethical behavior and compete fairly. They will also need to clean up financial irregularities taking management bandwidth.
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Can someone summarise how the government’s price control system for alcobevs works? To what extent is pricing power, and margins of Alcobev companies limited due to this? Just looking for a high level understanding of how this works, and whether it should come in the way of evaluating USL.
It is determined by excise department of state governments. Actually it is two way sword. You loose some pricing power but ensures that there is no irrational pricing by any competitor.
This may give some idea
https://webcache.googleusercontent.com/search?q=cache:Dv7Xwt7jfhMJ:https://cag.gov.in/uploads/download_audit_report/2019/Chapter_4_Pricing_of_Liquor_of_Report_No_1_of_2019_Pricing_of_Production_and_Sale_of_Liquo.pdf&cd=3&hl=en&ct=clnk&gl=in
Those who are old enough will remember that prior to liberalization most prices including steel and cement were determined by government. And likes of Tata Steel and ACC were super profitable company because everyone wanted those brands. Post liberalization, market forces ensured that competitive pricing led to collapse of profits.
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Law catching up with unscrupulous player. Guess who benefits.
Exponential rise of IPL and team valuations
United Spirits is play on IPL and social Bangalore. Women franchisee will create similar value in 10 years.
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A true gentleman and a friend.
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This will benefit Diageo and USL.
This is bound to happen sooner than later. Britain does not have an option. They will relent to Indian demands including visa issues for working out bilateral trade agreement to get concessions like this from one of world’s largest market.
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Interesting RCB EBIDTA is up 3x compared to last year. This is seasonal in nature but looks like RCB will contribute to 10-20% of EPS going forward.
Management commentary is also very positive on RCB
“I am happy to share that Royal Challengers Sports Private Limited (RCSPL)’s, our wholly-owned
subsidiary, has stepped up its earnings, driven by revenues from the Indian Premier League new
media rights cycle. This reinforces our longer-term confidence in the Women’s Premier League.
Our Sports business aligns to our core purpose of celebration and is a vital component of our
consolidated portfolio.”
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Can you please elaborate how it would be positive for USL as the article says importing Bulk Whiskey from UK
Bulk Whiskey (with tariff concessions) is cheaper to import so margins can be higher or prices can be lowered to improve volume.
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One bottle of imported whiskey sold by the company from warehouse may be at Rs.100/- before any State taxes/excise. The landed cost of the bottle after heavy customs duty may be 90 and hence, the margin of Rs.10.
Now if you are importing in bulk with lower customs duty, the landed cost per bottle/unit may be lower than bottled one. You incur cost for setting/managing a bottling plant and then sell it as “bottled in India”. So if sold at the previous price, the margins can be high which can be passed on by lower pricing.
Additionally, one may even consider importing in bulk, undertake in-bond manufacturing and then export. Here one dont have to pay import duty as well or even if paid, would get back the duty as drawback or refund.
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So IPL valuation has vaulted from 10 Billion USD to 30 Billion USD.
This also implies that RCB valuations should be north of 2 Billion USD.
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Seems to be decent results at 4.69 EPS.
Returns as a dividend paying company after a long gap of 10 years
“The Board of Directors at their meeting held today have inter alia approved payment of interim dividend of Rs. 4 per equity share (face value of Rs. 2 each) for the financial year ending 31st March 2024”
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Considering the historical Price-to-Earnings (P/E) ratios and in comparison to Radico Khaitan, United Spirits appears reasonably or undervalued. However, there are conflicting opinions, with some asserting that United Spirits is expensive at its current valuation.
To evaluate whether a valuation is deemed expensive, reasonable, or undervalued, one should consider specific metrics. Could anyone please provide guidance on which metrics to focus on for such assessments?
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i think good idea to add revenue, ebita, pat and cashflow growth over 3, 5 and 10 years for both to understand true essence of their current valuations…
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